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Conclusion

Investing prudently is long-term process for most people that can be complex, but many of the critical elements of that process can be simplified, and the costs of investing and time commitment needed to invest efficiently have dropped dramatically in recent decades. By using the right products and services and taking the right steps, most investors that save appropriately can implement and execute a plan to provide for their financial needs and achieve their goals.

Investing involves risk. But if you educate yourself, invest using the right tools, avoid paying too much in taxes and to advisors, as well as avoid self-inflicted mistakes, you can minimize the risks and maximize the probability of having a comfortable financial future and peaceful life.

Investors today have low cost access to information and tools that have levelled the playing field between individual investors and investment professionals. Almost all the worthwhile asset classes that high net worth and institutional investors have historically utilized can be accessed, or effectively replicated by individual investors. Not only can individual investors hope to compete with the so-called professional investors, they can strive to outperform them by minimizing their costs, avoiding speculative and expensive products, and avoiding behavioral and other mistakes that too many investors make.

In 2004 Jack Meyer of Harvard Management publicly called the investment industry a scam. As I discussed in chapter four, I consider most investment services and products to be more inferior or obsolete, than a scam, but a critical point is that even the smartest and richest can struggle to invest successfully. From 1990 to 2005, Harvard’s returns were excellent. But after that period, Harvard’s endowment underperformed simple passive strategies like a 60% stock 40% bond portfolio. Roger Lowenstein summarized in 2015 in Fortune magazine with the following. “Harvard Management Co., which runs the endowment, has been rocked by turmoil. It recently hired a new CEO—its fourth in a decade—and talented investors have departed amid embarrassing publicity over disappointing performance and eye-catchingly generous bonuses.” Through 2015, according to data from Harvard and Nacubo, the average endowment earned 6.3% a year over the previous 10 years, compared with 6.8% for a 60%/40% blend of U.S. stocks and bonds.1

Ben Carlson summarized in February 2017 that for the ten years ending June 2016, a simple portfolio using Vanguard funds (40% U.S. Stock, 20% International Stocks and 40% US Bond Market Index Fund) beat the average endowment fund and would have ranked in the top quartile for the prior three, five, and ten years. The total cost of the respective benchmark portfolio using Vanguard ETFs at that time was about 0.07%. Carlson commenting about the endowments, noted that “the funds are invested in venture capital, private equity, infrastructure, private real estate, timber, the best hedge funds money can buy; they have access to the best stock and bond fund managers; they use leverage; they invest in complicated derivatives; they use the biggest and most connected consultants, and the vast majority of these funds still fail to beat a low-cost Vanguard index fund portfolio.”2

Sandeep Dahiya and David Yermack used IRS filings to calculate returns for over 28,000 endowment funds from 2009-2016 and determined they underperformed a simple 60/40 mix of U.S. stocks and treasury bonds by over 5% per year.3 Similarly, near the end of 2018, Institutional Investor magazine noted that according to a Markov Processes International report, none of the Ivy League endowment funds beat a simple 60/40 U.S. portfolio for the prior ten years covering July 2008 through June 2018 (although they did for the prior 15 years).4

Early in the 1980s, U.S. Pension plan return assumptions averaged more than 8%. Around that time, the interest rate on 30 year U.S. treasury bonds hovered close to 8%, so those return assumptions were not unreasonable. But over the following decades, interest rates trended lower toward less than 3%.5 Pension fund return assumptions dropped only slightly resulting in a large increase in the probability of actual returns falling short of those assumptions. Pensions attempted to increase their returns by shunning bonds and instead flocking to alternative investments.

Jeff Hooke and Ken Yook published a paper in 2018 titled “The Grand Experiment: The State and Municipal Pension Fund Diversification into Alternative Assets.” They studied performance over several decades and found pension funds underperformed multiple benchmarks. They concluded that the pension funds attempting to realize higher returns with lower volatility through alternative assets "obtained neither lower risk nor higher returns with the higher level of active management and diversification implied by alternative assets. The experiment is thus a failure."6 But not all endowments made that mistake. Bloomberg reported in 2018 on a small Wisconsin college that outperformed their endowment rivals by using index funds – the equivalent of what individual investors can access.7

Sophisticated investors often underperform despite having access to some alternative investments that individual investors generally don’t have access to. Specifically, private equity and venture capital offer potentially attractive returns and diversification, yet they also tend to have very high costs and can underperform over relatively long time periods. Kroll Bond Rating Agency noted recently that public pension funds had been adding alternative investments to their portfolios for years, but the managers they were choosing weren’t delivering the returns they expected. Kroll suggested that not all pension funds have the internal staff, governance, and oversight capabilities to manage the complexity inherent in portfolios with large allocations to alternatives such as private equity and hedge funds.8

Many institutional investors became enamored with hedge funds in recent decades, and for the most part that has been a costly mistake. Hedge funds have suffered six straight quarters of net outflows (through 3Q 2019)9 yet data is mixed on institutional investors continued commitment to hedge funds. According to Ernst & Young's 2018 Global Alternative Fund Survey, more large institutional investors planned to decrease hedge fund allocations (21%) than increase them (7%), while more planned to increase private equity (34%) than decrease (9%).10 Some are projecting that private equity asset will outgrow hedge fund assets by 2023.11 But some of the largest investors have other conflicts of interest that may be affecting their investment decisions. For instance, several of the largest donations to Harvard’s endowment have been from hedge fund managers themselves.12 That could be one explanation for Harvard’s endowment having a third of its fund allocated to hedge funds (Yale and Princeton have about a quarter), despite hedge funds poor performance, which contributed to Harvard having the lowest returns among its Ivy League peers over the last decade.13

Many individual investors can and do invest in their own business or other businesses (which is somewhat comparable to private equity or venture capital), but that tends to be riskier than a diversified portfolio of business interests. Individual investors should consider private business investments for modest portions of their portfolios, but the return and risk tradeoff should be evaluated very carefully. Business investments can be very complex and many investors may not fully understand their nature, asset class exposure, and their respective risks. They can be difficult to value and they can be very illiquid, with no ability to extract the income or principal when needed, which introduces additional risks and complications.

Another major consideration for investors has been how to choose specific securities and companies to invest in. An enormous amount of time, effort, and money is spent on trying to pick individual stocks and other securities in an attempt to beat the market. For most investors, there is simply no need to play that game. The default for peaceful investors is to broadly diversify in asset classes. For investors to overweight or underweight positions in asset classes, they need to have enough of an advantage (or alpha) to outweigh any costs and tax effects, which is the exception rather than the rule. Data also consistently shows that high cost funds underperform low cost funds, and there is also evidence that high fee managers are also associated with poor management.14

If you are going to play the stock picking, or factor investing games, you are up against researchers and professionals that have analyzed historical data and have allocated extraordinary amounts of capital to building systems and tools that are constantly evaluating current prices and searching for good values. If you think value strategies, momentum, or any of the other anomalies or factors will continue to outperform you have to believe you can compete with the other market participants already pursing those strategies with enormous amounts of capital. I’ve worked with many managers with hundreds of billions of dollars that employ strategies based on the academic research. Many others are aware of the research, yet decide not to pursue the strategies. The following academics and professionals cited in this book are associated with prominent money management organizations.

As more investors get educated and take advantage of lower cost and more efficient tools and services, the investment industry is likely to struggle to be as profitable as it has been in the past. Joseph Sullivan of Legg Mason suggested at the start of 2018 that the industry has become used to ‘unsustainable’ margins and is facing a “hyper competitive and hyper disruptive period.”15

For some perspective, keep in mind that in 1870, almost 50 percent of the U.S. population was employed in agriculture. By 2008, less than 2 percent of the population was directly employed in agriculture.16 The U.S. finance industry comprised only 10% of total non-farm business profits in 1947, but it grew to 50% by 2010. Over the same period, finance industry income as a proportion of GDP rose from 2.5% to 7.5%, and the finance industry's proportion of all corporate income rose from 10% to 20%.17 It dropped to below 6.5% as a result of the recent Global Financial Crisis, but rose back to 7.5% in 2015.18

Mutual funds and ETFs are excellent vehicles for investing in a diversified portfolio of stocks and bonds, and REITs are an excellent option for investing in real estate (also available via mutual funds and ETFs). Used appropriately, they provide broad diversification with extremely low costs. ETF inflows have been a multiple of mutual funds inflows in recent years. In 2017 ETFs attracted $464 billion versus $91 billion flowing into mutual funds.19 In 2018 ETF funds slowed to just over $310 billion, while mutual funds collected just over $150 billion.20

Yet, some have legitimate concerns about ETFs relative to mutual funds. Jack Bogle described the story behind the first ETF and why he was unenthusiastic about the idea. Nathan Most suggested it to Bogle as a vehicle that could be traded all day. Bogle noted that investors already trade too much and the trading mentality is counterproductive for most. Most then turned to State Street Global Advisors which created SPDR, the first ETF. Ironically, despite Bogle’s concern, Vanguard has become one of the biggest sponsors of ETFs and has a unique advantage in having patented a structure for sharing the same portfolio in both ETFs and traditional mutual funds.21 Bogle summarized evidence from the Vanguard equivalent ETF and mutual funds showing that ETF users have much higher turnover and on average underperform, while mutual fund holders have close to fund returns.22 Although, there are some costs ETF sponsors can avoid (that mutual fund sponsors incur) and Vanguard recently reduced annual fees on some of their ETFs to below the level of the lowest cost equivalent Vanguard mutual fund.

Jack Bogle’s Legacy

I was working on the final draft of this book when Jack Bogle passed away on January 16, 2019, at the age of 89. I only had the pleasure of meeting him once, but he had an enormous impact on me. Scores of individuals in the financial press and social media wrote public tributes to Bogle following the news of his passing,23 yet it seems difficult to do justice to Bogle because his influence has been so profound on the investment industry. Some of the terms used to describe Bogle included gentleman, entrepreneur, innovator, giant, titan, legend, centurion, hero, and saint.

Bogle is usually credited with creating the first index mutual fund, but his impact was immense in multiple ways beyond that pioneering creation. Vanguard was not the only firm introducing and promoting index funds, in fact, my former bosses were involved in some of the initial attempts to develop funds that would effectively match the market, rather than try to beat it. Some firms now offer index funds for free (at a loss, expecting to make up the losses through other means).[24]24

Jack Bogle created a unique structure at Vanguard whereby the fund manager is owned by its fund shareholders, rather than by insiders or stockholders. As a result, Vanguard’s interests are aligned with the shareholders and rather than maximize revenues or profit, fees are set to match the costs of running the funds, and the organization. When revenue exceeds costs, Vanguard cuts the fees (something they have done hundreds of times). The unique structure that Bogle created at Vanguard forced the industry to be even more competitive. Laurence Siegel noted in 2018 that Vanguard had reached a 25% market share of long-term mutual fund assets.25 No firm had ever been over 15% before (Massachusetts Investors, Investors Diversified Services, and Fidelity all got 15% market share). Of the 50 largest fund companies, Vanguard is the only one mutually owned (something Bogle actually considered a failure, according to Allan Roth).26

A third major innovation by Bogle was Vanguard's decision to go no-load. Vanguard summarized "Mr. Bogle and Vanguard again broke from industry tradition in 1977, when Vanguard ceased to market its funds through brokers and instead offered them directly to investors. The company eliminated sales charges and became a pure no-load mutual fund complex—a move that would save shareholders hundreds of millions of dollars in sales commissions."27

Another impressive achievement is the fact that Vanguard has had such high customer service rankings. Vanguard historically ranks at or among the top of customer service surveys28 (despite occasional glitches).29 Vanguard's hybrid Robo-Advisor "Personal Advisor Services" claimed the top position in Backend Benchmarking's first edition of The Robo Ranking.30 Bogle described Vanguard's hybrid Robo-Advisor as "robo-plus" in a late 2018 interview, several weeks after having a pacemaker implanted in his transplanted heart.31 In May 2019 Morningstar awarded Vanguard its first "Exemplary Stewardship" award. Morningstar's Laura Pavlenko Lutton stated "The firm's investors have benefitted from its scale and its commitment to straightforward, well-executed strategies that consistently put investors first, which is the hallmark of strong stewardship."32

Customer satisfaction is, of course, related to performance and the performance of Vanguard's funds speaks for itself. Whether you look at all funds, money market funds, stock, bond, or balanced funds, over the long run, Vanguard's funds tend to outperform competitive funds roughly 90% of the time. 86% of Vanguard's funds beat their peer-group averages over the five-years, and 94% surpassed their peer-group averages over the ten-year period ended December 31, 2017.33

Bogle's remarkable list of accomplishments included the following.

I have no idea whether the Nobel committee ever considered Bogle for the Nobel Prize (by rule they do not consider the award posthumously). I would certainly give him credit for being the most important and impactful person in the history of investing. Bogle made it possible for tens of millions of investors to live more peaceful financial lives. Nobel laureate Paul Samuelson is credited with the idea of the index fund and he ranked Bogle's index fund "invention along with the invention of the wheel, the alphabet, Gutenberg printing, and wine and cheese."36

In 1995 Tyler Mathisen wrote in Money Magazine in an article titled "BOGLE WINS: INDEX FUNDS SHOULD BE THE CORE OF MOST PORTFOLIOS TODAY" that "Indexing should form the core of most investors' fund portfolios."37 For most investors in public securities, Vanguard's index funds are a good default. There are other index fund providers and assets that Vanguard that does not offer directly through funds, but given Vanguard's structure and history, it should be the first choice. All other firms and funds need to have a strong enough advantage to justify getting ahead of Vanguard in the pecking order. That's not to say there aren't other good firms and investing options (in fact, I use others in addition to Vanguard). It's just rational to start with Vanguard and only use others if there are compelling reasons.

The question of whether too much money is chasing stock market anomalies or risk factors like value investing (as I discussed in chapters 20-24) at any given time is a very legitimate concern. Others ask whether index investing has become too popular. Given the marginal costs of active investing and the argument that most active investing is speculative rather than investment oriented, I think more investors and money should be indexed than less. But the fewer the number of active investors and the lower the turnover from active investors, the less liquid markets can become and the more volatile markets can be.

Estimates of the percentage of investment funds that are indexed vary depending on the date and metric, but the trend toward indexing that Bogle initiated is continuing. Index fund assets under management have grown from near zero in the 1980s to about 30% of registered fund assets globally in 2017 according to a January 2018 Vanguard release.38 In 1997, I posted a commentary titled “The Magic Number” about the significant of Vanguard's index fund becoming the largest mutual fund in the country.39 I updated an online scorecard through 2000 when the Vanguard index fund outgrew the Fidelity Magellan fund to take the title of largest mutual fund. By the end of 2018, Vanguard not only managed the largest mutual fund, they managed the three largest U.S. stock40 and three largest U.S. bond funds.41

Barron's noted in May of 2018, that index funds accounted for 43% of all stock fund assets, and were expected to reach 50% in the next three years,42 yet in September of 2019, according to Morningstar data, U.S. indexed equity assets exceeded active equity assets at the end of August 2019.43 In total, there were almost $7 trillion in U.S. funds that don’t use active managers. The Wall Street Journal noted in 2018 that active mutual funds accounted for 92% of U.S. stock funds in 1997, but that had fallen to 56%44 and Bloomberg reported in early 2019 that according Morningstar, large cap equity index funds already had more assets than large cap active equity funds as of the end of 2018.45 In March 2019, Moody's projected that passive investing will overtake active investing in the U.S. in 2021 (passive assets in Europe are expected to rise from 14.5% in 2018 to about 25% by 2025).46

Calvin Coolidge said “After all, the chief business of the American people is business." U.S. investors depend on the success of America's business to generate returns on their investments. While many have won Nobel and other prizes for academic and other advancements, no one has had the tangible impact on America's investment business like Jack Bogle. Occupy Wall Street and many commentators have argued that Wall Street and investment professionals make too much money, and there is some validity to those arguments. What we know for sure, is that the financial industry would have made a lot more money, and millions of investors would have less, if it weren't for Jack Bogle.

Some in the finance industry suggest “you get what you pay for” with investment services and some research arguably can be used to support that argument in a few specific cases.47 But the vast majority of the evidence disputes that suggestion and argues the opposite applies in investing. Jack Bogle often used the phrase “In investing, you get what you don't pay for.”48 I prefer the phrase “you keep what you don’t pay for.” Peaceful investors benefit from avoiding expensive investment products and services whenever possible, and as a result they keep more of their money.

One of the advantages of modern liquid investments is they can be tracked virtually continuously. But for multiple reasons it can be a good idea to avoid checking values frequently. In Thinking, Fast and Slow, Daniel Kahneman advised investors to reduce “the frequency with which they check how well their investments are doing. Closely following daily fluctuations is a losing proposition, because the pain of the frequent losses exceeds the pleasure of the equally frequent small gains. Once a quarter is enough, and may be more than enough for individual investors. In addition to improving the emotional quality of life, the deliberate avoidance of exposure to short-term outcomes improves the quality of both decisions and outcomes.”

Investors lucky enough to work for organizations that offer retirement plans and matching contributions should in most cases take full advantage of those benefits. The use of auto-enrollment and auto-escalation of contributions are increasingly becoming the norm. Those without access to those options should make the extra effort to save and invest on their own.

Investors with formal plans usually make return projections and historical rates of returns are a good starting point, but expectations should be adjusted based on current interest rates, and potentially other significant factors. John West and Amie Ko at Research Affiliates have argued that using historical returns to forecast the future is a common shortcut that often creates unrealistic expectations and potentially poor investment outcomes.49 Research Affiliates’ Asset Allocation Interactive tool50 uses starting yields to forecast future long-term returns which can help in constructing portfolios to meet specific financial goals, but most investors shouldn’t need a sophisticated tool to make reasonable adjustments to forward looking returns projections.

In recent years Christine Benz at Morningstar has been posting an interesting collection of stock and bond forecasts at the start of each year from several prominent sources, including Morningstar, GMO, Research Affiliates, Charles Schwab, and Vanguard (the organization, as well as Jack Bogle’s personal forecast). Although Wall Street equity strategists tend to be optimistic about the U.S. stock market for the coming year,51 most recent longer term stock return projections have been in the low to mid-single digits. GMO tends to be the most pessimistic and has even projected U.S. returns below inflation (and in fact, in 2018 U.S. and most international stock markets had negative returns making some of GMO’s projections look more prescient than in some other years). Bond returns projections have tended to also be very low, which is consistent with current bond yields and relatively low inflation.52

A Wall Street Journal article at the start of 2018 pointed out that many professional investors were struggling to find asset classes that offered attractive returns, given that most pension funds hope to earn 7-8% on their investments to fund future benefits. Wilshire Consulting President Andrew Junkin was quoted stating "everything is overvalued.”53 The moral of the story is to have realistic expectations. We may be in a low return, or even potentially a negative return environment for awhile. According to the same article, only private equity outperformed stocks between 2010 and 2016, per the Center for Retirement Research at Boston College, while hedge-funds returns barely exceeded 1% and commodities lost money.

When projecting returns, it’s also important to subtract all costs (and taxes in taxable accounts). Historically U.S. stocks have returned about 6.6% above inflation. A do-it-yourself taxable investor using a total market index fund (with virtually no management cost) can hope to have a real net return of about 5-6% after fees in the long run. An investor with an advisor that charges 1% that invests with a mutual fund or stock manager that charges another 1% is likely to get a real net return of 4% or less (if the future is similar to the past). An institutional investor that uses a fund of funds manager investing in equity hedge funds may end up with a real return of only 2-3% (the Hedge Fund manager may charge 2-3% with performance fees, and the fund of fund manager may charge over 1%). Active managers will often suggest they intend to generate alpha (or returns above the market) of several percentage points, but the basic laws of arithmetic54 and the actual historical data portend investors should expect the opposite (underperformance by the amount of their fees).

2019 and the last decade have been excellent for most investors, with strong returns in most asset classes, and psychologically it’s uplifting to be optimistic about returns. But for the long term, it is usually beneficial to be reasonable about expectations, especially when interest rates are at or near all-time lows. That implies investors should avoid being overly optimistic about future returns, and continue to minimize costs as much as possible.

For perspective on lower expectations we only need to consider the year 2018 and the decade from 2000-2009. Most investors and many investment asset classes had net losses in 2018 (the investment costs, outweighed the dividends and income for the year). From 2000-2009, equities “had the worst calendar decade for stocks since the 1820s, when reliable stock-market records began.”55 Regardless of the circumstances, it’s never comfortable for investors to lose money, while the investment industry continues to syphon off unreasonable amounts of money.

As is almost always the case, there is good and bad news as we look to the future. The bad news is realistic expected returns for many investors are lower that many are projecting (in August of 2019, the interest rate on the 30 year U.S. bond dropped below 2%). But the good news is that it has never been easier to create and maintain efficient portfolios and costs can be cut to close to zero. Investors that minimize costs and taxes can aim to outperform so-called professionals that are committed to high cost investments.

In closing, I offer the following checklist to help you “stay the course” (as Jack Bogle used to stay) and hopefully help you live financially, happily ever after.

Checklist for the Peaceful Investor

1. Be financially literate.56 Test yourself at http://www.usfinancialcapability.org/quiz.php and http://www.usfinancialcapability.org/quiz.php

2. Understand the differences between investing, trading, speculating, and gambling (see chapters 5 - 10). Focus on the long term, not the short term.

3. Decide if you need an advisor, or second opinion. If so, find one you can trust that has the right background to help you, without charging an excessive amount. Don’t allow anyone to scam you or take advantage of you. (see chapter 30)

4. Know your financials and live within your means. (see chapter 29)

a. Know your assets and liabilities, current cash flow, and estimate your future flows.
b. Know your tax bracket.
c. Have emergency plans.

5. If you don’t have enough yet, appreciate what you do have and develop a plan to get where you want to go financially. If you have enough, don’t do anything to risk your financial future or your health.57 Try to keep greed, fear, and past experiences from making you do things that will hurt you in the long-term.

6. Know your risk tolerance and biases.

a. Do you have prior experiences that could affect your ability to invest appropriately?
b. Do you tend to make quick decisions based on gut instinct?
c. Are you excessively risk averse? Do you tend to take unnecessary risks?

7. Determine and maintain an appropriate asset allocation for your risk tolerance, goals, and constraints.

8. Default to broadly diversified funds. Active management, or factor investing need to have a high enough probability of succeeding after costs and taxes to be worthwhile.

9. Minimize your investment costs. Default to cheaper options when possible (see chapters 7 - 10).

10. Project returns based on historical returns for asset classes, but adjust based on current interest rates, and subtract costs. Don’t assume recent patterns will continue, especially if they are inconsistent with the long-term experience. Be skeptical of the herd and fads.

11. Stress test your portfolio based on good and bad scenarios. Use crisis and downturns as opportunities to rebalance and acquire bargains. Buy low and sell high, not vice versa.

12. Schedule reviews periodically, and rebalance as appropriate based on reasonable asset allocation ranges. Revisit risk tolerance questions at least once a year.

Notes
1. Roger Lowenstein "Why Colleges Are Getting a ‘C’ in Investing" Fortune, 12/9/2016 http://fortune.com/college-endowments-investing/
2. http://awealthofcommonsense.com/2017/02/how-the-bogle-model-beats-the-yale-model/
3. Sandeep Dahiya and David Yermack, Investment Returns and Distribution Policies of Non-Profit Endowment Funds, January 2019 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3291117
4. Julie Segal,Not One Ivy League Endowment Beat a Simple U.S. 60-40 Portfolio Over Ten Years, November 29, 2018 https://www.institutionalinvestor.com/article/b1c1c4tq2bjm3c/Not-One-Ivy-League-Endowment-Beat-a-Simple-U-S-60-40-Portfolio-Over-Ten-Years
See also https://www.markovprocesses.com/blog/measuring-the-ivy-2018-a-good-year-for-returns-but-is-efficiency-becoming-an-issue/
https://www.nytimes.com/2018/12/13/business/ivy-league-endowments-investments-portfolio.html
https://finance.yahoo.com/news/ivy-league-endowments-same-old-110008104.html
https://ritholtz.com/2019/10/measuring-the-ivy-2018/
5. See figure 3 in link below. State Public Pension Funds’ Investment Practices and Performance: 2016 Data Update Substantial investment in complex and risky assets exposes funds to market volatility and high fees, September 26, 2018 https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2018/09/state-public-pension-funds--investment-practices-and--performance-2016-data-update
6. Jeff Hooke and Ken Yook “The Grand Experiment: The State and Municipal Pension Fund Diversification into Alternative Assets,” The Journal of Investing, Fall 2018 https://joi.iijournals.com/content/27/supplement/21
7. Janet Lorin, Tiny Wisconsin College Using Index Funds Trounces Endowment Rivals, August 7, 2018 https://www.bloomberg.com/news/articles/2018-08-07/wisconsin-college-using-index-funds-trounces-endowment-rivals
8. Julie Segal, "Bad Manager Picks Have Sunk Pensions’ Bet on Alts," Institutional Investor, February 05, 2019 http://www.institutionalinvestor.com/article/b1d0dhchpqj5bs/Bad-Manager-Picks-Have-Sunk-Pensions-Bet-on-Alts
9. https://www.hedgeweek.com/2019/10/24/279835/hedge-fund-industry-sees-6th-consecutive-quarter-outflows
https://www.institutionalinvestor.com/article/b1h6vxhxq2jrjq/Woe-Betide-the-Hedge-Fund-Marketer
10. https://www.pionline.com/article/20181105/ONLINE/181109949 November 5, 2018
11. https://www.ft.com/content/715fda20-d6ff-11e8-a854-33d6f82e62f8
12. https://www.bostonglobe.com/metro/2018/11/08/look-harvard-largest-gifts/753L6Fkxy1aBS9rgwbKeiK/story.html
13. Michael McDonald, Harvard Piles Into Hedge Funds as New Chief Overhauls Endowment, May 6, 2019 https://www.bloomberg.com/news/articles/2019-05-06/harvard-piles-into-hedge-funds-as-new-chief-overhauls-endowment
14. Derek Horstmeyer, Double Whammy: High-Fee Mutual Funds Do Worse, January 4, 2019 https://www.wsj.com/articles/double-whammy-high-fee-mutual-funds-do-worse-11546630477
15. https://www.ft.com/content/2b24568a-ea7e-11e7-bd17-521324c81e23
16. https://en.wikipedia.org/wiki/Agriculture_in_the_United_States
http://www.bls.gov/emp/ep_table_201.htm
http://www.csrees.usda.gov/qlinks/extension.html
17. https://en.wikipedia.org/wiki/Financial_services
18. See https://graphics.wsj.com/how-the-world-has-changed-since-2008-financial-crisis/
19. https://www.marketwatch.com/story/etfs-shattered-their-growth-records-in-2017-2017-12-11
20. https://www.schwabfunds.com/public/csim/nn/etf-insights/follow-the-money-what-we-learned-from-2018-etf-flows.html
https://www.investmentnews.com/article/20190117/FREE/190119930/morningstar-says-investors-rushed-the-exits-in-2018
21. Joanne M. Hill, The Evolution and Success of Index Strategies in ETFs Financial Analysts Journal, September/Ocotober 2016 https://www.ft.com/content/f406d50c-bbcf-11e6-8b45-b8b81dd5d080
22. John C. Bogle. "The Index Mutual Fund: 40 Years of Growth, Change, and Challenge," Financial Analysts Journal, January/February 2016
23. http://www.investorhome.com/bogle-tributes.htm
24. See for instance, Cheapest Index Fund Providers via riabiz.com https://riabiz.com/a/2018/12/13/vanguards-asset-machine-wobbles-under-abby-johnsons-withering-pricing-assault-but-fidelitys-new-cost-cutting-front-aimed-at-advisors-is-proving-more-lethal-for-blackrock
25. https://www.advisorperspectives.com/articles/2018/01/22/uneasy-lies-the-head-that-wears-a-crown-a-conversation-with-jack-bogle
26. https://www.financial-planning.com/opinion/vanguard-founder-father-of-index-investing-jack-bogles-impact-on-finance
27. https://investornews.vanguard/a-look-back-at-the-life-of-vanguards-founder/
28. https://www.consumerreports.org/cro/investment-companies/buying-guide/index.htm
29. https://www.philly.com/philly/business/vanguard-loses-top-spot-in-customer-satisfaction-after-website-issues-20181113.html
30. https://theroboreport.com/robo-rankings/
31. https://www.thinkadvisor.com/2018/11/27/john-bogle-rias-are-the-future-trading-is-investor/
32. https://investornews.vanguard/vanguard-receives-exemplary-stewardship-award-from-morningstar/
https://www.prnewswire.com/news-releases/winners-announced-for-2019-us-morningstar-awards-for-investing-excellence-300847535.html
33. https://investornews.vanguard/performance-report-vanguard-funds-outperformed-over-long-run/
& 3Q2018 https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article/NewsPerformanceReport3Q2018
34. https://riabiz.com/a/2019/1/16/mission-accomplished-jack-bogle-dies-at-89-and-its-still-way-too-soon-but-his-legacy-looms-larger-than-ever
35. https://www.advisorperspectives.com/articles/2018/01/22/uneasy-lies-the-head-that-wears-a-crown-a-conversation-with-jack-bogle
36. https://en.wikipedia.org/wiki/John_C._Bogle
37. https://money.cnn.com/magazines/moneymag/moneymag_archive/1995/08/01/205191/index.htm
38. https://advisors.vanguard.com/iwe/pdf/ISGBEL.pdf
39. http://investorhome.com/magicsc.htm
40. http://www.wsj.com/mdc/public/page/2_3023-largstkbal-20190104.html
41. http://www.wsj.com/mdc/public/page/2_3023-largtaxfds-20190104.html
42. https://www.barrons.com/articles/jack-bogles-battle-1526674385
43. https://www.bloomberg.com/news/articles/2019-09-11/passive-u-s-equity-funds-eclipse-active-in-epic-industry-shift
44. https://www.wsj.com/articles/the-case-for-stock-picking-1534508238
45. https://www.bloomberg.com/news/articles/2019-02-12/passive-funds-overtake-stock-pickers-in-u-s-large-cap-market
46. https://www.moodys.com/research/Moodys-Adoption-of-passive-investing-on-track-to-overtake-active--PBC_1165197
http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1165022
47. For instance see Jinfei Sheng, Mikhail Simutin, and Terry Zhang, “Cheaper is Not Better: On the Superior Performance of High-Fee Mutual Funds,” April 14, 2017 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2912511
John Rekenthaler at Morningstar, in a modestly complicated analysis, concludes otherwise. https://www.morningstar.com/articles/904903/the-academic-argument-for-expensive-mutual-funds.html
48. https://www.vanguard.com/bogle_site/sp20050202.htm
49. John West and Amie Ko, The Most Dangerous (and Ubiquitous) Shortcut in Financial Planning, September 2017 https://www.researchaffiliates.com/en_us/publications/articles/634-ignoring-starting-yields-nabbing-this-usual-suspect-in-poor-investment-outcomes.html
50. https://interactive.researchaffiliates.com/asset-allocation/#!/?currency=USD&model=ER&scale=LINEAR&terms=REAL
51. https://www.cnbc.com/2018/12/17/wall-streets-stock-forecasters-see-the-bull-market-stretching-to-one-more-year.html
52. Christine Benz, Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition January 10, 2019 https://www.morningstar.com/articles/907378/experts-forecast-longterm-stock-and-bond-returns-2.html
Christine Benz, Experts Forecast Long-Term Stock and Bond Returns: 2018 Edition January 8, 2018 https://www.morningstar.com/articles/842900/experts-forecast-longterm-stock-and-bond-returns-2.html
Christine Benz, Experts Forecast Long-Term Stock and Bond Returns: 2017 Edition January 12, 2017 http://news.morningstar.com/articlenet/article.aspx?id=787927
http://news.morningstar.com/articlenet/article.aspx?id=842900
53. Pension Funds’ Dilemma: What to Buy When Nothing Is Cheap? 1/1/2018 https://www.wsj.com/articles/pension-funds-dilemma-what-to-buy-when-nothing-is-cheap-1514808000
54. William Sharpe, “The Arithmetic of Active Management” The Financial Analysts' Journal, January/February 1991 https://web.stanford.edu/~wfsharpe/art/active/active.htm
55. http://www.investorhome.com/zeroes.htm
https://www.marketwatch.com/story/final-trading-day-of-2009-opens-with-declines-2009-12-31 (citing William Goetzmann)
56. See http://www.heartsandwallets.com/uploads/7/8/3/2/78321658/advice_and_tech_brochure_2017_-_order_form.pdf and see https://www.plansponsor.com/fewer-people-rely-employer-source-investment-advice/ for data and discussion about where investors get advice and information.
57. See http://www.advisorperspectives.com/articles/2016/01/19/lessons-from-billionaires-who-ve-gone-broke/2 for data on the reasons billionaires go broke.


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